< The 2015 Latin America Research Team
Total appearances: 3
Team debut: 2013After a year as a runner-up, Itaú BBA recaptures the No. 3 spot it earned in its 2013 debut on this lineup. Ricardo Cavanagh, 47, oversees the Santiago-based team, which supplies “more complete coverage than pretty much anyone else,” one fund manager attests. “They have significant on-the-ground resources and a good handle on domestic companies.” In particular, this client cites the researchers’ shrewd and timely reporting on Parque Arauco, noting that the shopping center concern has proved to be “one of the few growth opportunities” in Chile — and was roundly overlooked by competitors. Headquartered in Santiago and operating malls in Chile, Colombia and Peru, Parque Arauco has been under their coverage since last July. Cavanagh and his colleagues deemed the developer a defensive play and assigned it an outperform rating. It was trading at a discount to Brazilian rivals, they noted, and earnings for 2014 and 2015 were projected in the low double digits. Further, they anticipated that management would soon announce the development of at least one new large shopping center in Chile, even as construction of a midsize site was under way in Peru. Sure enough, by the middle of last month, the stock had risen 12.5 percent, to 1,203 pesos, against the domestic broad market’s decline of 5.7 percent. In general, the “mood is gloomy” in Chile, the crew chief acknowledges, and “the topic of the day is how to stimulate the animal spirits needed to push up investments. Traded volumes are at lows that haven’t been seen since 2006.” However, the squad does like financials names because banks are delivering returns on average equity that are “well above the cost of equity,” he adds, their dividend yields are above sovereigns’ and price-to-book ratios are “below their three-year averages.” In a tough economy, moreover, banks appear resilient, with less exposure to negative surprises. Touted in this industry as attractively valued and likely to keep pace with the market are the country’s No. 1 and No. 2 private lenders, Banco Santander-Chile and Banco de Chile, respectively, both of which are based in Santiago. This year Cavanagh appears on two additional lineups, heading the No. 2 Argentina squad as well as a group that earns its second consecutive runner-up position for reporting on North Andean Countries.